U.S. Businesses Raise $1.04 Billion through Crowdfunding in 2018, up from $915 Million in 2017

New data from SCORE shows crowdfunding on the rise for small businesses

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Dec 06, 2018, 13:09 ET

WASHINGTON, Dec. 6, 2018 /PRNewswire/ -- Small businesses are increasingly relying on crowdfunding, according to new survey data from SCORE, the nation's largest network of volunteer, expert business mentors. In 2018, U.S. businesses raised $1.04 billion, a significant increase from the $915 million raised in 2017. SCORE's latest infographic, sponsored by Nav, details recent trends and projections in crowdfunding for small businesses.

Small businesses are increasingly relying on crowdfunding, according to new survey data from SCORE, the nation’s largest network of volunteer, expert business mentors. In 2018, U.S. businesses raised $1.04 billion, a significant increase from the $915 million raised in 2017. SCORE’s latest infographic, sponsored by Nav, details recent trends and projections in crowdfunding for small businesses.

The term crowdfunding refers to the practice of raising small amounts of money from multiple people, and has become more popular with businesses and individuals every year since its inception.

Crowdfunding options popular with small businesses include:

Reward-based: Backers receive an early version of the product or other rewards, with examples including Kickstarter and Indiegogo. There is no maximum amount to this fundraising method, and it typically costs 8%-10% in fees.
Equity: Individuals invest in return for company share. The maximum funding amount is $1.07 million, and it typically costs 3%-6% in fees, plus $10K-$100K in professional fees.
Debt: Backers provide loans in exchange for interest. The maximum funding amount is $500K, and it typically costs 5%-27% in fees.

In the US, crowdfunding raises more money for small businesses every year – with continued growth predicted:

2016: $800 million
2017: $915 million
2018: $1.04 billion
2019: $1.17 billion
2020: $1.3 billion

Campaign success rates, and dollar amounts raised, vary by category:

Design: 36% are successful
Fashion: 25.8%
Food: 24.8%
Technology: 19.9%

Top tips for crowdfunding success for small businesses include:

Preparation: Research similar campaigns and choose the best platform and funding goal.
Pitching: Share your unique story and create engaging photos and video.
Promotion: Use your networks of family, friends, community and social media followers, and update your backers frequently.

After a successful crowdfunding campaign, continued benefits include:

Strengthened customer base
Increased publicity
Higher likelihood of external financing
Stronger potential for business partnerships

Download this infographic for more information on crowdfunding trends in the small business community.

About SCORE

Since 1964, SCORE has helped more than 11 million aspiring entrepreneurs. Each year, SCORE's 10,000 volunteer business experts provide 750,000+ free small business mentoring sessions, workshops and educational services to clients in 300 chapters nationwide. In 2017, SCORE volunteers helped to create 54,506 small businesses and 61,534 non-owner jobs.

For more information about starting or operating a small business, visit SCORE at www.score.org. Follow @SCOREMentors on Facebook, Instagram and Twitter for the latest small business news and updates.

Contact Information
Betsy Dougert
800-634-0245
[email protected]

SOURCE SCORE